Constitutional Court of Ukraine cancels liability for illegal enrichment, striking down anticorruption progress

The Constitutional Court published its decision on recognizing the article of the Criminal Code on illegal embezzlement as unconstitutional. Photo: 5.ua 

Politics, Reforms

On 26 February, the Constitutional Court of Ukraine made a decision which rolled back part of the achievements the country made in fighting corruption. In particular, it ruled to recognize article 368-2 of the Criminal Code which foresaw responsibility for illegal embezzlement as unconstitutional. As a result, according to the National Anti-Corruption Bureau (NABU), a new institution on investigating top-level corruption, 65 of their cases will now be closed. Another new institution, the National Agency on Corruption Prevention (NACP), says it now is not able to identify signs of illegal embezzlement in the 500 asset declarations it started checking in 2019. Additionally, the decision is bad news for Ukraine’s international obligations.

The question of fighting corruption rose to the top of Ukraine’s agenda after the Euromaidan revolution. Civil society started to search for ways to do this, and its voice was strong. Just after the revolution, politicians who came to power attempted to become its allies. Those from the inner circle of runaway president Viktor Yanukovych kept quiet, afraid to repeat his path.

Civil society got to work on drafting a plan for new anti-corruption infrastructure. The president and other authorities and politicians took part in it, even though the working infrastructure could have brought them to justice one day as well. Ukraine’s western partners have also been actively involved in the process.

Five years later, politicians care about civil society much less. Oleksandra Dvoretska from the Vostok SOS NGO [“East SOS”] says that in  2014-2015 it was much easier to have a meeting with a public servant or politician.

“Probably they were afraid of a mass public movement. Many things used to depend on volunteers. Now the authorities got used to power and allow themselves to be rude to us.”

So their attempts to roll back one of the most demanded reforms become more successful.

The article on illegal embezzlement

The article which the Constitutional Court canceled foresaw bringing public officials whose assets and expenditures clearly exceeded their official incomes to justice. So, if a judge owned posh buildings and cars his salary couldn’t buy, he would be considered corrupt. However, to avoid violating the presumption of innocence, investigators and prosecutors have to prove that the assets of suspected officials indeed are too luxurious for their official incomes.

In 2017, 59 MPs appealed to cancel responsibility for illegal embezzlement. Some of them were accused under this article.

On 26 February 2019, they finally succeeded as the Constitutional Court published its decision on recognizing the article of the Criminal Code on illegal embezzlement as unconstitutional.

According to the Court’s decision, the above-mentioned article did not comply with the principles of the rule of law and the presumption of innocence. In particular, it allegedly obliged a suspect to prove that his wealth is legal, whereas the presumption of innocence implies that it is the prosecutors who provide proof of wrongdoing.

However, the anti-corruption initiative of the EUACI, the EU program on technical support for the fight against corruption in Ukraine refuted the arguments of the Constitutional Court and published their conclusion that the canceled article was constitutional. The conclusion argues that the article does not place the burden of proof on the accused, but allows them to refute convincing accusations presented by prosecutors by revealing the legal sources of their wealth.

Consequences

Following the news, NABU published a statement saying that the decision of the Constitutional Court is a step back in the anti-corruption fight in Ukraine.

The bureau is investigating 65 criminal proceedings concerning embezzlement of more than UAH 0.5bn ($18,631mn). Among the accused are judges, prosecutors, MPs, former and current heads of state institutions.

“The decision of the Constitutional Court means that all the proceedings related to the illegal embezzlement of these people will be closed. As well as the cases which already are considered in courts,” says the NABU statement.

It also gives an example of the head of the State Auditing Service who is accused of embezzling nearly UAH10mn ($372,620) embezzlement, the military prosecutor of the Anti-Terrorist Operation (the previous name of the de-facto war in Ukraine) who is accused of embezzling UAH3mn ($111,786), a judge from Luhansk Oblast (over UAH13mn – $484,406)), Minister of Infrastructure (over UAH4mn – $149,048).  

On 28 February, President Poroshenko introduced a new law to parliament to restore the article.

But even if it is returned to the Criminal Code, renewing the investigations on those 65 criminal proceedings would be impossible, as the law does not have retroactive effect. Only new cases regarding actions which took place in 2019 after the new version of the article is adopted can be opened. The illegal assets acquired before this period would be considered legal by default.

According to the National Agency on Corruption Prevention (NACP), the court decision made it impossible to identify signs of illegal embezzlement in the asset declarations of 2015-2018 years. In 2019, 500 verifications of the declarations were started.

Oleksandr Manhul, the head of the NACP, reminded that criminalization of embezzlement is an obligation Ukraine undertook while ratifying the UN Convention against Corruption, Criminal Convention on the Fight Against Corruption, Additional protocol to the Criminal Convention on the fight against corruption, and identified by the recommendations against corruption of groups of the countries of the Council of Europe and other institutions.

The Anti-Corruption Action Centre (AntAC), an NGO actively involved in advocating the anti-corruption reform in Ukraine, draws attention to other international aspects. The article canceled by the Constitution Court was introduced in 2014, and was one of the key obligations of Ukraine to the International Monetary Fund (IMF). The powers to investigate the cases should have been given to the NABU.

“According to IMF rules, if obligations established by the previous memorandum in the framework of funding programs are rolled back, this will obstruct receiving the next tranches. Because of responsibility for illegal embezzlement was canceled, Ukraine will not receive the next IMF tranche, even if all the other requirements of the current memorandum with IMF will be implemented,” writes the NGO.

The criminalization of illegal embezzlement has also been one of the EU requirements in terms of the Contract on the Country Building. And the effective work of the system of the e-declarations of the state servants’ assets was a demand of the EU visa liberalization plan and current macro-financial EU support for Ukraine.

Can the crisis be resolved?

On 28 February, Presidnt Petro Poroshenko introduced a new bill on criminal responsibility for embezzlement to the Verkhovna Rada (Parliament). His representative in the Parliament Iryna Lutsenko said that it could be considered ducing the next plenary session week.

“If the Verkhovna Rada passes it and the president signs it, the Constitutional Court will not be able to recognize it as unconstitutional, as it takes into account all remarks [of the Court, in particular on the presumption of innocence]… I think that the President’s article will give an opportunity to bring the corrupts regarding whom evidence of illegal embezzlement has been collected  to justice and to consider it in the anti-corruption court.”

The Anti-Corruption Court will become a final element in the framework of investigative institutions fighting top-corruption in Ukraine. So far, the chain is represented by the NABU and the Specialized Anti-Corruption Prosecutor’s Office (SAPO). The cases they investigate are stuck in Ukraine’s overloaded courts. That is why the idea of an Anti-Corruption Court appeared on Ukraine’s agenda. Right now, the final stages of selecting judges to the court are taking place.

Read also: Anti-Corruption Court in Ukraine: so far, so good, but dangers lie ahead

But according to the AntAC, the bill filed by the president, in fact, makes it impossible to prove illegal embezzlement in court. The candidate for president Yuliya Tymoshenko also suggested her version on a new article on illegal embezzlement. According to the AntAC, it also makes bringing the accused to justice impossible.

Mykola Havroniuk, the expert of the Centre of Policy and Legal Reform, suggests that, in fact, the NABU should not give up the cases which might be closed due to the Court decision as other violations can be identified in them. For example, the corrupts can be accused according to the articles on money laundering, false declaration of assets, or tax evasion.

Who is responsibe?

Meanwhile, representatives of NGOs involved in the reform blame Poroshenko for the situation.

The Anti-Corruption Action Centre clarifies that it was Poroshenko who, as the author of the law on the Constitutional Court, had to ensure that it was formed through an independent competition, but he had not. He also has not withdrawn the judges of the presidential quota who had worked during the times of the runaway president Viktor Yanukovych.

Journalist-turned-MP Mustafa Nayyem said that the decision was made at a closed court session; 14 out of 18 judges voted in favor. The names of the four who voted against are: Ihor Slidenko, Viktor Kolesnik, Vasyl Lemak, and Serhiy Holovatyi. According to Nayyem, among the 59 MPs which appealed to the Constitution Court, 23 are from Narodnyi Front, 11 – from Petro Poroshenko’s Bloc and 11 from Vidrodzhennia, 10 from the Opposition Bloc, 3 from Volia Narodu, and 1 from the Radical Party.

Mykhailo Zhernakov, the Head of the DEJURE Foundation draws attention to the fact that the judges who were appointed to the court last year due to the involvement of civil society NGOs and honored president of the Venice Commission Hanna Suhotska in the selection process had not voted for the current decision of the court.

Read more:

Edited by: Alya Shandra

Since you’re here – we have a favor to ask. Russia’s hybrid war against Ukraine is ongoing, but major news agencies have gone away. But we’re here to stay, and will keep on providing quality, independent, open-access information on Ukrainian reforms, Russia’s hybrid war, human rights violations, political prisoners, Ukrainian history, and more. We are a non-profit, don’t have any political sponsors, and never will. If you like what you see, please help keep us online with a donation!

Tags: , ,